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Towards Exoeconomics1 Developing an off-planet economy and its implications

Andrei ŞAPERA2

March 2013

Abstract

Over the last two decades the seeds of a New Space Era have been planted as

a result of significant leaps in knowledge and technology. Whilst hampered by the

tumultuous nature of our times, these seeds are growing due to a wave of

entrepreneurs, industrialists and billionaire space enthusiasts that, for the first time

ever, have enough wealth and the technology to drive space exploration.

The main purpose of the essay is to extract the essence of the events to be

analyzed and, if possible, make a couple of minuscule steps towards the

establishment of a new (theoretical) framework that will enable a better

understanding of the society we live in, within a world that is about to become larger.

1 The term “exoeconomics” has been used before, since it is an obvious composition of “exo” (outside) and “economics” (the social science). However, Internet search results show no connection between the term and any research paper, article or work with intellectual property. Therefore, there is no association between the definition of the term in this essay and any other utilization of the word. 2 MSc student, Double Degree Program – Master in Geopolitics and International Affaires, Bucharest University of Economic Studies, Romania / Master in Political Economy, BI Norwegian Business School, Oslo, Norway.

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Introduction

On 25 May 2012, Elon Musk’s SpaceX made history as the world's first privately

held company to send a cargo payload, carried on the Dragon spacecraft, to the

International Space Station3.

This event could represent a milestone, or a turning point, in the economic

history and human history, having profound ramifications and implications at all

levels. This essay aims at outlining and briefly exploring some of the implications of

this event and other similar achievements that could have an impact on our global

society in the long-run.

Since this will not be an extensive paper, I will not be able to get into much

(technical) detail on any of the implications or drill very deep into the scenarios

outlined. In this paper, I will try to look beyond the “space economy” and “space

industry” structures of the present moment, into the future, in a context of

increasingly rapid-growing technologies driven by a wave of entrepreneurs,

engineers and private initiatives.

The year 2012 was called “the year of private spaceflight”4, due to an impressive

list of private space companies announcing ambitious plans to explore space, exploit

asteroids, send tourists in space or put people on Mars.

Therefore, I will first look into the economic context of these space-related

projects, focusing on the private initiatives and outlining some of the most important

technological trends that are the background of these major economic shifts (Part 1).

Then I will explore some of the economic implications and factors and make steps

towards defining an extensive highly-interdisciplinary framework, or a proto-social-

science, that we could call “exoeconomics”, having technology and technological

innovation at the core of its existence, and also one that will put together knowledge

and experience from various scientific fields (Part 2). Since space exploration was

conducted by governments with enough resources to support such complex and

expensive endeavours, I will discuss briefly about the main challenges to politics,

international treaties, policies and regulations that private spaceflight brings (Part 3).

3 For updates on the missions, check SpaceX official website, Updates section. https://spacex.com/updates.php 4 “The Year's Most Audacious Private Space Exploration Plans”, Adam Mann, Wired Science (27.12.2012)

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Afterwards, I will try to put all the main ideas extracted along the way under an

anthropological perspective, which, in my opinion, will know some of the most

profound ramifications (Part 4). Finally, I will draw the conclusions of this essay.

I propose a dynamic and, hopefully, engaging essay, by providing links to

videos, speeches, scientific articles, press releases, reports, books and other

material that will support the arguments brought along the way.

"Three, two, one and launch of the SpaceX Falcon 9 rocket, as NASA turns to the

private sector to resupply the International Space Station," said NASA commentator

George Diller, as the spacecraft blasted off at 3:44 am (07:44 GMT, May 22, 2012)5

1. Towards Exoeconomics

1.1. Flight of the White Knight

Behind the key-events that could mark the beginning of a new privately-driven

space age there are key-persons that have made sustained efforts over the last two

decades towards this direction. One of the key-persons is Peter H. Diamandis , an

American engineer, physician, author and entrepreneur. He is the founder and chair

of the X Prize Foundation, a non-profit organization whose mission is simply "to bring

about radical breakthroughs for the benefit of humanity", by offering large cash

incentive prizes to inventors who can solve grand challenges like space flight, low-

cost mobile medical diagnostics and oil spill cleanup.6

The Ansari X Prize , launched in May 1996, was a space competition in which

the X Prize Foundation offered a US$10 Million prize for the first non-governmental

organization to launch a reusable manned spacecraft into space twice within two

weeks. It was modelled after early 20th-century aviation prizes, and aimed to spur

development of low-cost spaceflight. The prize “sparked an explosion in the number

of private companies hawking technologies they claimed could be the future of space

5 “SpaceX blasts off to ISS in historic first”, Reuters, Global Times, 23 May 2012. 6 See Peter Diamandis’ profile on Ted.com - http://www.ted.com/speakers/peter_diamandis.html

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tourism”7 and it was won on October 4, 2004, the 47th anniversary of the Sputnik 1

launch, by the Tier One project designed by Burt Rutan and financed by Microsoft

co-founder Paul Allen , using the experimental spaceplane SpaceShipOne. 8

Elbert Leander "Burt" Rutan 9 (born June 17, 1943) is an American aerospace

engineer noted for his originality in designing light, strong, unusual-looking, energy-

efficient aircraft, such as the record-breaking Voyager, which was the first plane to fly

around the world without stopping or refuelling. Rutan designed the Tier One project

as an ensemble of two crafts: SpaceShipOne (Sub-orbital air-launched spaceplane)

+ White Knight (Mother Ship). Both craft were developed and flown by Mojave

Aerospace Ventures, which was a joint venture between Paul Allen and Scaled

Composites, Burt Rutan's aviation company. Allen provided the funding of

approximately US$25 million10.

1.2. The New Space Era

Commercialization of space activities is not a new trend and, needless to say,

there is already an ensemble of space and space-related activities, driven by various

private and public actors around the world, which is called a “space economy”, with a

structure that extends for more than five decades in the past, throughout the Space

Age. Space commercialization has its origins in the 1980s, when governments,

through their national space agencies, started contracting corporations or

establishing and funding private entities to develop aircraft and spacecraft

components, rockets and propulsion systems, satellite platforms and robots, in order

to increase safety and boost technological innovation. And since the space industry

is a highly complex and expensive structure, having both civilian and military

applications, geopolitical interests related to defence, security and communication

have always been main priorities in the decisional process regarding national space

7 “Up: the story behind Richard Branson’s goal to make Virgin a galactic success”, Adam Higgibotham, 07 March 2013, Wired.co.uk. 8 For more information, check Ansari X Prize website - http://space.xprize.org/ansari-x-prize 9 For more information about Burt Rutan and his projects, check official website - http://burtrutan.com/burtrutan/BurtRutan.php 10 More information about Scaled Composites, SpaceShipOne and other projects on Scaled Composites website - http://www.scaled.com/

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agencies budgets, projects and long-term strategies. Although important

technological progress has been achieved and major steps in human history have

been made (with setting foot on the Moon being probably the most important), this

structure has become also very rigid and inefficient, even though large corporations

have struggled to keep up with the contracts. American engineer Robert Zubrin

offers very useful insights to this matter in the first part of his book “Entering Space –

Creating a Spacefaring Civilization” (Zubrin, 2000).

Thus, I will not discuss about large companies (such as Boeing, Lockheed

Martin, EADS, Thales or Dassault) with decades of experience within the aerospace

industry or satellite manufacturing, companies which eventually developed space-

related activities, platforms and products, providing governments and space

agencies with aircrafts, propulsion systems, technology with civilian and military

applications and equipment. My focus will be on a new segment of small companies

founded over the last 10-15 years, setting an explosive trend which had an

impressive peak in 2012 and continuing in 2013. These small teams and private/non-

governmental entities are struggling to develop their own propulsion and launch

systems, capsules and spacecrafts, and an entire infrastructure for human space

exploration, space tourism and exploitation of space resources, dreaming beyond

the limits that have been so far reached. Peter Diamandis says that “we’re living in a

period in time where exponential growth is enabling small teams to do extraordinary

things, things that only governments and large corporations could do before”11. Thus,

this essay is concerned with this new wave of techno-philanthropists, engineers,

space enthusiasts and visionaries that have set new goals for the New Age of Space

Exploration and have a different approach, with no direct connection to governments

and their national space agencies, although partnerships are developing (the most

important so far being NASA contracting SpaceX and Orbital Sciences for the ISS

ressuply).

It will be very interesting to see the long-term results of this new wave of

innovators and visionaries, contouring a paradigm shift or probably a series of

paradigm shifts in the economic theory and the economic thinking. Soon these key-

11 See video of Peter H. Diamandis – “We are evolving into meta-intelligence group-minds” for GF2045. https://www.youtube.com/watch?v=nV1M5ARfHAc

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events and the underlying drivers will have to be incorporated in the theoretical

framework of various fields.

The Ansari X Prize, the largest prize in history, has shown that spaceflight was

no longer the exclusive realm of government. With that single flight, and the winning

of the $ 10 million prize, a new industry was born (reference, website). Dr. Buzz

Aldrin (NASA Astronaut, Apollo 11 crew member) said that “I think the [Ansari] X

Prize should be viewed as the beginning of one giant leap…” And indeed it was.

Following the success of Burt Rutan’s SpaceShipOne , the vehicle’s successor,

SpaceShipTwo was developed by The Spaceship Company (TSC), a joint venture

of Scaled Composites and Richard Branson’s Virgin Galactic. Sir Richard Charles

Nicholas Branson (born 18 July 1950), the English business magnate, best known

as the founder and chairman of Virgin Group and many other companies, is

developing a suborbital commercial human spaceflight platform for space tourism,

called Tier 1b (SpaceShipTwo space plane + WhiteKnightTwo “mothership”), which

uses all the same basic technology, carbon composite construction and design as

SpaceShipOne. Virgin Galactic plans to provide sub-orbital spaceflights to space

tourists, suborbital launches for space science missions and orbital launches of small

satellites. Further in the future Virgin Galactic hopes to offer orbital human

spaceflights as well12.

In October 2012, it was confirmed that SpaceShipTwo had completed the

subsonic portion of its flight card successfully and that it was preparing for the

supersonic, powered flight. SpaceShipTwo is expected to begin commercial

operations in late 2013 or 2014. In order to reduce risks to minimum, commercial

flights have been postponed, while more safety tests are completed. More than 500

persons have enrolled for the sub-orbital flights, paying a price of $200 000 for a

ticket. “Virgin Galactic has managed to reduce drastically the price of getting to

space and over time will reduce it further” (Virgin Galactic website – Overview –

Tickets). Virgin Galactic’s Spaceport America is almost completed, but due to legal

debates and safety issues, its future functionality is still uncertain.13

12 For more information on the project and test updates, check official website - http://www.virgingalactic.com/ 13 To learn more about the Spaceships, the Spaceport and Safety, check official website – Overview section.

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Founded in 1998 by spaceflight and technology entrepreneur Eric C.

Anderson 14, Space Adventures , Ltd. is the world’s first private space exploration

company and the only company currently providing opportunities for actual private

spaceflight and space tourism. Space Adventures is the only company the have sent

self-funded individuals to space, seven clients with completed missions so far.

However, they have utilized Russian Space Agency’s Soyuz platform, capsule and

rockets to reach the International Space Station. Clients have paid prices going from

$20 million to $35 million.1516

If Richard Branson succeeds in developing this space tourism platform and

starts commercial flights, it would mark a significant achievement, both

technologically and in terms of costs, substantially reducing the price of a sub-orbital

flight.

Some of these new space companies are developing joint projects and

platforms with national space agencies. In 2006, NASA announced the Commercial

Orbital Transportation Services (COTS) program to coordinate the delivery of cargo

and crew to the International Space Station by private companies, with SpaceX and

Orbital Sciences being the two private groups to be awarded contracts at the end of

the competition.

While Orbital Sciences is still testing its Cygnus capsule and the Antares rocket,

SpaceX has already successfully accomplished the first experimental mission to the

International Space Station (22-25 May 2012) and the first mission out of 12

contracted (CR-1 Mission, October 2012), with the second mission still in progress

(CR-2). As I write, the Dragon capsule is connected to the ISS, after the successful

launch on March 1st and docking with the ISS Sunday, March 3rd17.18

14 Eric Anderson’s official website - http://www.ecanderson.com/ 15 Official Space Adventures website - http://www.spaceadventures.com/ 16 For more information and updates on Space Adventures, visit NewSpaceJournal, Space Adventures section - http://www.newspacejournal.com/ 17 Official page for NASA’s COTS program - http://www.nasa.gov/offices/c3po/home/cots_project.html 18 Official Orbital Sciences website - http://www.orbital.com/

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SpaceX19 is in fact the only private company at the present moment to have an

entire operational platform with an ensemble of a launching system and a cargo

transport vehicle (a capsule that it is expected to be soon human-rated). SpaceX has

built its own infrastructure, manufacturing their own capsule (Dragon), launch

systems (Falcon 1, Falcon 9 and Falcon Heavy – under development), propulsion

systems (Kestrel, Merlin, Raptor) and the experimental tech demonstrator

Grasshopper. I will discuss more about SpaceX in a short case study.

On NewSpaceJournal20 website I could find a list of around 40 private space

companies and non-governmental entities. Some of them are profit-driven,

developing ambitious business plans in space (Virgin Galactic, Planetary Resources,

Deep Space Industries), while others are non-profit organization funded by wealthy

space enthusiasts and technophilantropists (such as Inspiration Mars). Not all of the

companies listed are within the segment I am targeting in this essay. Some groups

have large corporations that support the projects, such as Boeing or EADS. Virgin

Galactic could be placed in the same category; however, SpaceShipTwo is based on

its predecessor developed by Scaled Composites which had a different technological

approach, creating an efficient, light-weight space plane, launched from a

mothership. Of course these large corporations have brought and will bring

tremendous contributions to the space industry, with projects such as the Dream

Chaser, developed by Sierra Nevada or Boeing’s CST-100 capsule. Other private

space companies that have achieved technological progress over the last decade

are Bigelow Aerospace (founded in 1999), Armadillo Aerospace (founded in 2000),

XCOR Aerospace (founded in 1999).

1.3. Year of private space companies

I will now briefly go through some of the most important private space

exploration projects that have been announced in 2012, following an explosive trend

19 Official SpaceX website - https://spacex.com/ 20 For more information and updates on most of the companies listed here, check New Space Journal website - http://www.newspacejournal.com/

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that continued in 2013. At the end of 2012, Wired made a list of “the year’s most

audacious private space exploration plans”21, offering a plausibility score for each of

the project listed. More detailed information, news and updated can be accessed on

New Space Journal online channel.

Wired website writes “So how did 2012 turn into the year of private space?

Perhaps the most important factor was the trailblazing success of SpaceX, a

commercial rocket business started by entrepreneur and PayPal founder Elon Musk.

This year, the company conducted two launches to the International Space Station

using their Falcon 9 vehicle, with the second mission bringing supplies and helping

prove that SpaceX was on the path to ferrying astronauts.”

SpaceX is already planning their next rocket, the powerful Falcon Heavy, for

launch in 2013 and recently won important contracts with the U.S. military to deliver

hardware to space. Though not announced in 2012, “SpaceX’s Falcon Heavy has

been a hot topic as the company prepares to launch this new rocket in 2013. Once

operational, the vehicle would be the most capable existing rocket, able to bring

120,000 pounds (approx. 54,500 kg) to low-Earth orbit for as little as $1,000 per

pound (0.5 kg). The closest current spacecraft is United Launch Alliance’s Delta

rocket, which can take 50,000 pounds (22,700 kg) up at a cost of $6,000 per pound.”

writes Wired.

Falcon Heavy has a number of other companies hoping to ride on its success.

Both Golden Spike and Mars One plan to use the vehicle in their operation while

NASA and the military are also looking forward to its capabilities. Elon Musk has

recently stated that he plans to put people on Mars and help establish a colony in the

next 10 to 20 years, by providing the transportation22.

Space venture Golden Spike Company announced the plants to take people

back to the moon by 2020. For the price of $1.5 billion, Golden Spike will land a two-

person crew on the lunar surface and safely return them.

B612 Foundation , a non-profit company hopes to raise money to launch an

infrared telescope that will look out for dangerous asteroids coming toward Earth.

Though NASA is already watching for these potentially civilization destroying rocks,

21 See the entire article here - http://www.wired.com/wiredscience/2012/12/audacious-space-companies-2012/ 22See article here - http://www.wired.com/wiredscience/2012/11/elon-musk-mars-colony/

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B612 said they would be able to more than double the near-Earth object catalogue in

their first month of observation.

Announced in May, MarsOne has an extremely aggressive goal: land a crew of

four on the Red Planet by 2023. The company hopes to cut costs with a radical

mission. They intend to send people on a one-way trip to set up a colony, with a new

set of four settlers arriving every two years after the initial touchdown. However,

most sceptics and specialists say that this is one of the least probable space

projects.

Intended to stimulate new ideas for exploring the moon, the Google Lunar X-

Prize was announced in 2007. The goal is for a small private team to land an

autonomous rover on the lunar surface, travel about 300m, and send back high-

definition images and video. The first team to do so will win $20 million, and

constellation prizes are offered for other tasks. The prize’s deadline was originally

meant to expire in 2012, but after insufficient progress was made, the foundation

extended their target date to the end of 2015.

Regarding the development of private space tourism, Wired writes that “Should

Virgin Galactic (and Scaled Composites) somehow fail in its venture, there are

plenty of other space tourism companies waiting in the wings. While somewhat

behind Virgin, XCOR’s Lynx spaceplane could begin testing in 2013. The company

hopes to offer tourist flights to the edge of space for the bargain price of $95,000.

Amazon founder Jeff Bezos’ secretive Blue Origin could also stun everyone by

unveiling a new rocket plane in the near future, though this seems less likely. But all

the private space companies are worth keeping an eye on.”

In April 2012, Planetary Resources revealed their asteroid mining plans. The

company hopes to extract water and precious metals, such as platinum, in order to

get a return on their investment. Planetary Resources' biggest strength comes from

its financial backing, with founders Eric Anderson and Peter Diamandis veterans of

both Silicon Valley and space technology. Investors behind the company include

Google CEO Larry Page, Eric Schmidt (Google), Microsoft chief architect Charles

Simonyi, and even filmmaker James Cameron. The company’s goals are very long

term, with simple plans to launch telescopes to identify and catalogue near-Earth

asteroids in the next few years, and the actual mining and resource extraction as

much as 20 years away.

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As I wrote earlier, this trend of ambitious projects has continued in 2013.

Another asteroid mining company has been founded and announced the strategies,

plans and visions – Deep Space Industries . I will discuss more about the asteroid

mining issue and prospects in a sub-chapter to come.

Also, the first space tourist, Dennis Tito, made public the intention to send a

manned mission to flyby Mars in 2018, establishing the non-profit organization

Inspiration Mars.

1.4. SpaceX – A Case Study

One of the key-persons in this wave of visionaries is Elon Musk (born 28 June

1971), an American entrepreneur, co-founder of PayPal, chairman and CEO of Tesla

Motors, founder, CEO and CTO of SpaceX , chairman of SolarCity, and the man who

has has been called “the 21st Century Industrialist”23.

During his studies (in physics and economics), Elon considered three areas that

were important problems that would most affect the future of humanity. One was the

Internet, one was clean energy, and one was space. Musk views space exploration

as an important step in expanding, if not preserving, the consciousness of human

life. Musk has said that multiplanetary life may serve as a hedge against threats to

the survival of the human species.

Elon Musk founded SpaceX in 2002 with $100 million of his early fortune. It has

now nearly 2000 employees. In 10 years it has become a successful business

model, an example of an efficiently integrated microeconomic structure and, thus, a

very interesting business case study. Musk's goal is to reduce the cost of human

spaceflight by a factor of 100. Elon declared that “because SpaceX is so vertically

integrated, we know and can control the overwhelming majority of our costs. This is

why I am so confident that our performance will increase and our prices will decline

over time, as in the case with every other technology” (May 4, 2011, SpaceX

updates).

23 “Elon Musk – the 21st Century Industrialist” on Bloomberg Businessweek - http://www.businessweek.com/articles/2012-09-13/elon-musk-the-21st-century-industrialist

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On SpaceX website, the company presents itself as “the only private company

ever to return a spacecraft from low-Earth orbit, which it first accomplished in

December 2010. The company made history again in May 2012 when its Dragon

spacecraft attached to the International Space Station, exchanged cargo payloads,

and returned safely to Earth – a technically challenging feat previously accomplished

only by governments. In October 2012, Dragon again successfully delivered cargo to

and from the space station, in the first official cargo resupply mission for NASA.”

In order to control quality and costs, SpaceX designs, tests and fabricates the

majority of its components in-house, including the Merlin, Kestrel, and Draco rocket

engines used on the Falcon launch vehicles and the Dragon spacecraft. SpaceX

website offers some useful information.

� The price of a standard flight on a Falcon 9 rocket is $54 million.

� The average price of a full-up NASA Dragon cargo mission to the

International Space Station is $133 million including inflation (fixed price

contract with NASA for 12 missions).

� The total company expenditures since being founded in 2002 through the

2010 fiscal year were less than $800 million.

� The Falcon 9 launch vehicle was developed from a blank sheet to first launch

in four and half years for just over $300 million.

� The Dragon spacecraft was developed from a blank sheet to the first

demonstration flight in just over four years for about $300 million.

� SpaceX has been profitable every year since 2007, despite dramatic

employee growth and major infrastructure and operations investments. We

have over 40 flights on manifest representing over $3 billion in revenues.

(SpaceX updates, May 4, 2011)

“Moreover, SpaceX intends to make far more dramatic reductions in price in the

long term when full launch vehicle reusability is achieved. We will not be satisfied

with our progress until we have achieved this long sought goal of the space industry”

(Elon Musk, May 4, 2011, SpaceX updates).

Under a $1.6 billion contract with NASA, SpaceX will fly at least 11 more cargo

supply missions to the ISS, in addition to the October 2012 mission – and in the near

future, SpaceX plans to carry crew as well. Dragon was designed from the outset to

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carry astronauts and now, under a $440 million agreement with NASA, SpaceX is

making modifications to make Dragon crew-ready (SpaceX website – Company

section).

In order to put SpaceX costs, expenditures and revenues in perspective, we

could make a few comparisons, just to set a couple of reference points. On NASA

website, we find that “the average cost to launch a Space Shuttle is about $450

million per mission.” Other sources write that “the average cost per launch was about

$1.2 billion (in 2010 dollars) during the shuttle's operational years from 1982 to 2010.

But it rises to $1.5 billion per flight when factoring in lifetime program costs,

according to the new analysis, which covered the 131 shuttle missions flown

between 1982 and 2010.”24

The costs of space exploration driven by national space agencies were often an

impediment, alongside political and social pressure. NASA’s requested budget for

2007 was nearly $17 billion, in 2012 was almost $18 billion. There are some who

argue that money would be better spent on solid ground, for medical research, social

programs or in finding solutions to major problems. By comparing the budget of

NASA with the Military budget of the United States, we form an idea about the

national priorities. “The 2007 budget allocates roughly $609 billion to defense, not

including the budget for the Department of Homeland Security. This is nearly 38

times the amount of money spent on NASA. If you include funding for the

Department of Homeland Security, defense spending adds up to $652.5 billion,

which is more than 40 times NASA’s budget. While few question the need to

maintain a strong military in an uncertain age, some might consider it excessive for

the United States to spend more on its military than the next fifteen biggest defense

spenders put together, especially as most of them are American allies.”

(TheSpaceReview,2011). So how does the notion that we should solve our problems

on Earth before we go into space” look in front of these numbers and comparisons?

The economics and the politics behind the Space Shuttle program (and the

entire NASA strategy) form a very intricate web that has pushed the national agency

into an identity crisis.

Although this essay is not about the American space industry, it happens that

most of the private space companies are American, while NASA still remains the

24 “Total Cost of NASA’s Space Shuttle Program” on space.com - http://www.space.com/11358-nasa-space-shuttle-program-cost-30-years.html

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largest national space agency. While NASA had a budget of around $17 billion over

the last 5 years, the Russian Federal Space Agency (ROSCOSMOS) has a budget

of approximately $5 billion. The European Space Agency (ESA), which is an

intergovernmental organization, currently with 20 member states, has an annual

budget of about $5.4 billion.

The series of achievements and milestones set by SpaceX fired an explosion of

private space companies and projects with various goals, spreading a wave of

enthusiasm and confidence in the future of space exploration. Therefore, SpaceX

could represent a “game changer” at many levels, in terms of technology, costs,

efficiency and also changing the dynamics of the space industry, marking the dawn

of a New Space Age.

1.5. Asteroid mining companies

Planetary Resources presented in April 2012 probably one of the most

ambitious and spectacular projects in outer space – asteroid mining. “Planetary

Resources is establishing a new paradigm for resource discovery and utilization that

will bring the solar system into humanity’s sphere of influence. Our technical

principals boast extensive experience in all phases of robotic space missions, from

designing and building, to testing and operating. We are visionaries, pioneers, rocket

scientists and industry leaders with proven track records on—and off—this planet.”

The team of entrepreneurs25, engineers and specialized advisors claim that

Space Economy will become a modern day Gold Rush. "If you look back historically

at what has caused humanity to make its largest investments in exploration and in

transportation, it has been going after resources, whether it's the Europeans going

after the spice routes or the American settlers looking toward the west for gold, oil,

timber or land," Diamandis said (Reuters, 2012).

They argue that asteroid mining will open a trillion-dollar industry and provide a

near-infinite supply of Platinum Group Metals and water to support our growth both

25 http://www.planetaryresources.com/team/

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on this planet and off. There are over 1,500 asteroids that are as easy to get to as

the surface of the Moon. They are also in Earth-like orbits with small gravity fields,

making them easier to approach and depart. Over 8800 asteroids have been

discovered to date, and more than 1000 are found every year.

Platinum-rich asteroids could contain more Platinum Group Metals than what’s

been mined on Earth in all of history, which could mean near-infinite supply of

precious resources.

One water-rich asteroid could produce enough fuel for every rocket launched in

history. The uses of water in space include rocket fuel, drinkable water, and

breathable air.

One single 500M water-rich asteroid would produce over $5 trillion worth of

water for use in space and one single 500M platinum-rich asteroid could be worth

more than $2.9 trillion. These resources could fuel and support spaceships, spate

stations, colonies, life, agriculture and future exploration, reducing the costs of

activities and transportation and reducing dependence on supplies and support from

Earth.

Following Planetary Resources, other groups and companies presented similar

projects and visions. Deep Space Industries believes the human race is ready to

begin harvesting the resources of space both for their use in space and to increase

the wealth and prosperity of the people of planet Earth.

“Asteroids are plentiful throughout the solar system. Many orbit close to the

Earth and many of these carry vast deposits of resources ranging from water to

metals such as iron, gold and platinum – everything we need to expand our

civilization into space, to provide for our needs here at home and to increase the

wealth of our planetary economy.” (Deep Space Industries website)

Asteroids are not the only objects targeted by space companies. There are also

plans to mine the Moon, which could contain useful and valuable resources, such as

so-called rare-earth minerals, which are used in a range of technologies and which

are currently refined almost exclusively in China. Other resources include water

frozen in the dark recesses of polar craters (which can be split into hydrogen for

rocket fuel and oxygen for breathing), Helium-3 (He-3), which apparently exists in

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abundance on the Moon and could be a future energy source, and valuable titanium

deposits26.

1.6. Exponentially Growing Technologies and the Law of Accelerating Returns

Having the possibility to exploit near-infinite resources is probably the most

important paradigm shift in economic history, since it reaches the core of our

economic thinking – the problem of “resource scarcity”. A finite system with finite

resources sets limits to economic growth.

Diamandis argues that “scarcity is contextual and technology is a resource

liberating force” (both here on Earth and out is space) and that “for the first time ever

we have enough wealth concentrated in the hands of a few individuals and the

technology accessible that will allow us to really drive space exploration” (Peter

Diamandis27).

Decades of analysis of the history of technology have lead to the conclusion that

technological change is exponential, contrary to the common-sense “intuitive linear”

view. Engineer and entrepreneur Ray Kurzweil argues that “we won’t experience 100

years of progress in the 21st century – it will be more like 20 000 years of progress

(at today’s rate). The “returns”, such as chip speed and cost-effectiveness, also

increase exponentially. There’s even an exponential growth in the rate of exponential

growth”. (Kurzweil, Law of Accelerating Returns, 2001).

Moore's law is the observation that over the history of computing hardware, the

number of transistors on integrated circuits doubles approximately every two years

(12 to 24 months, over the past years).

Extensive research shows that technological progress is a smooth curve.

Through war time and peace time, recession, depression and economic boom, it did

not slow for any of our grand challenges. This is the result of faster computers being

used to build faster computers. Even more the rate at which the technology is getting

faster is itself getting faster.

26 “What if you could mine the Moon?”, Regan Morris, BBC News. 27 See videography for Peter Diamandis and Ray Kurzweil Ted Video

17

Fast growing technologies such as Artificial Intelligence, robotics, nanomaterials,

synthetic biology, digital medicine, 3D manufacturing, infinite computing, sensors

and networks, are the powerful tools that are riding on Moore’s Law, growing at an

exponential rate, reshaping our societies, our industries and our economies, and

offering new solutions to our challenges (Diamandis, 2012).

These technologies, alongside the recent shifts in business dynamics within a

more integrated global information society, are the reason small groups of people

are able to engage in activities that were once the exclusive realm of governments

and large corporations. Forty years after the Apollo missions (1969 - 1972), the

average smartphone today has more computing power than Apollo 11 did when it

journeyed to the Moon.

Ten years ago, Dolman was writing: “That the space race is over and the Space

Age is in decay seems dismally obvious. That it will some day revive seems

nonetheless assured. Humanity’s future is in the stars. […] Our insatiable appetites

require vast new resources. Eventually we will fill this niche that is Earth and spill out

into the cosmos. But when and how this inevitable migration takes place is not at all

known.” (Dolman, 2001). Only a decade later, SpaceX becomes world's first privately

held company to send a cargo payload to the ISS and starts testing the most

capable existing rocket, with plans to go to Mars.

"In the long run, a single-planet species will not survive. One day, I don't know when,

but one day, there will be more humans living off the Earth than on it."

NASA director Mike Griffin, quoted in "Mars or Bust,"

Rolling Stone, 2006

2. Creating an off-planet economy 2.1. From financial turmoil to an age of abundance Man has conquered the physical environment and changed the world in a

profound way, but, in this process, created a human environment that is

overwhelmingly complicated. Paradigm shifts are becoming increasingly common,

“change” defines “normality” and the global landscape looks more and more like a

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“plotless, post-modern work starring a menagerie of wildly incongruent themes and

protagonists” (Schweller, 2009).

The last couple of years have thrown our (global) society into a multi-

dimensional/ multi-level crisis. Perhaps a more ardent issue than the financial and

economic crisis is the intellectual and theoretical crisis we are facing. The

neoclassical theoretical framework has failed to explain today’s reality and the

changes occurred at the global scale (Krugman, 2009). While the global

“metabolism” has accelerated and the growing complexity of the international human

society brings new challenges, we find ourselves offering old answers to new

questions.

However, while the entire world was struggling with turbulent financial times and

economists and scholars were desperately trying to grasp the roots and threads of

the global crisis, some economic major paradigm shifts have been brewing in the

background.

It has become private companies’ responsibility not only to open the space

frontier, but to drive innovation and stimulate breakthroughs in order to solve

Humanity’s grand challenges, here on Earth.

But in order to do so, the market place for investment in space technologies (as

well as in other fast growing technologies) needs to become more integrated and

flexible. It is during these early days of the New Space Age that we shape new

economic models and expand our economic thinking to a new level of understanding

of the world around us.

OECD report “The Space Economy at a Glance 2011” shows that the space

economy is an engine of economic growth, with the sector playing an increasingly

pivotal role in the efficient functioning of modern societies and their economic

development (OECD, 2011, p.27). Moreover, despite the economic crisis, the space

sector has fared relatively well since 2008. Space remains a strategic sector, often

sheltered because of national imperatives and institutional funding. The main

commercial markets for space services are telecommunications, satellite

broadcasting, Earth observation products and services, with the role of public

institutions remaining essential in the space sector.

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However, there is a long way from satellite launching systems to asteroid mining

capabilities and spaceships that will assure transportation from Earth to colonies and

space stations at an affordable price.

With fast growing technologies, the next decades could bring solutions to

various problems our world faces today and help make the transition from “resource

scarcity” to “resource abundance”.

2.2. The Entropy Law and the Planetary Thermodynamic System

Romanian mathematician, statistician and economist Nicholas-Georgescu

Roegen (1906 – 1994) was the first economist to realize that the Entropy Law

imposes limits to the economic process, considering it “the most economic of

physical laws”. Entropy irreversibly degrades, matter, energy, life, in a world

consumed by an increasing thirst for all of them. Every process in our world uses

low-entropy resources and transforms them, dissipating matter and energy in an

irreversible way. As usable “free energy” tends to disperse or become lost in the

form of “bound energy”, the material universe is subject to irreversible qualitative

changes in an evolutionary process.

The First Law of Thermodynamics (conservation of energy) states that energy

can be neither created nor destroyed. However, energy can change forms, and

energy can flow from one place to another. The total energy of an isolated system

remains the same. However planet Earth (or the global economy) is not an isolated

system, but it could be analyzed as a closed thermodynamic system. In a closed

system, no mass may be transferred in or out of the system boundaries. The system

always contains the same amount of matter, but heat and work can be exchanged

across the boundaries of the system. If we were to set the boundaries of this

physical system to 2000 km above Earth surface, the boundary between LEO (Low-

Earth Orbit) and MEO (Medium-Earth Orbit), and ignore the Geosynchronous and

Geostationary satellites in MEO, as well as the probes that were sent farther into the

Solar System and occasional pieces of asteroids that hit Earth’s atmosphere, we

could obtain a theoretical representation of Earth as a closed thermodynamic

system. There is a flow of heat, radiation, energy over this boarder, but no matter

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transfer. The amount of matter and energy remains the same, since they cannot be

destroyed or created, but their availability for natural and economic processes

decreases over time, until it reached a point of inability of a system’s energy to

perform work. In order to bring the system to the initial state of order and efficiency,

exogenous intervention is needed.

Humans survive by using low-entropy resources from the environment, such as

fossil fuels and concentrated mineral, and converting them into useless (high-

entropy) waste (Daly, 2005). In entropic terms, the outcome of every economic

process is a deficit, an irreplaceable loss in the quality of the environment. The main

idea is that in a finite environment, it is impossible to have i nfinite growth.

In this context, we understand what mining the asteroids and bringing the

resources back to Earth would mean. For the first time in economic history, global

economy would become an open system, incorporating valuable resources into its

production systems and preserving the environment. Thus, it becomes even more

obvious that opening the space frontier is not only a moral imperative, but a

pragmatic physical and material imperative in the long-run.

2.3. Defining “Exoeconomics”

Perhaps it is not too early to think of a macro-exo-economic model that an off-planet

economy would imply. By extending the economic theories, instruments and

research tools and adapt them to the future paradigm shifts, we could develop a

(social) science that analyzes the production, distribution, and consumption of goods

and services within a man-made structure, settlement, or colony that engages in

economic activities (such as mining or manufacturing), placed in outer space. The

economic activities of these structures will have to be put, of course, in relationship

to the global economy, since there should be a clear distinction between what we

call today “space economy” and the future off-planet economy, analyzed by

“exoeconomics”.

Technological progress speeds up while inequalities around the world are

growing. There are means to produce a world of abundance, but the economic

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models and the institutional framework are still stuck in old paradigms. “Successful

political/economic systems [that] have evolved flexible institutional structures […] can

survive the shocks and changes that are a part of successful evolution.” (North,

1994, p.367). Acemoglu and Robinson re-affirm that the reason nations are rich and

others are poor, divided by wealth and poverty, health and sickness, food and

famine, is not culture, nor weather, nor geography, nor ignorance. Based on fifteen

years of research, Acemoglu and Robinson brought historical evidence to show that

is man-made political and economic institutions that underlie economic success (or

the lack of it) (Acemoglu, Robinson, 2012).

Since institutions and economic models are structures that humans have

evolved, they are constructs that represent sets of rules and norms and abstractions

of our world/society. Although these constructs evolve through time, they still follow

our “intuitive linear” view, as Kurzweil argues. This is what makes our current

economic thinking and institutions fundamentally flawed in a context of exponentially

growing technologies.

If we are to exploit the full potential of the technologies available, open the

space frontier, reduce the inequalities around the world, and create a world of

abundance and countless possibilities, we will have to adapt our institutions.

3. Political challenges and regulatory implications Opening the space frontier with private projects brings a series of legal issues

that will have to be solved and integrated into a still young regulatory framework.

During the 1960s and the 1970s, a number of basic treaties and principles have

been enacted internationally, concerning the peaceful uses and non-appropriation of

space. Based on this regime, governments are liable under international space law

whenever a space object is launched from their territory, even if it is by a private

entity (OECD, 2011, p.32)

The trend of commercialization of space has become stronger over the last

decade as shown by two indicators (2011): the increasing number of commercial

actors in the sector and the rapid development of national space laws, simplifying the

rules of the road for institutional and commercial actors alike (OECD, 2011, p.31).

22

The Outer Space Treaty , formally the Treaty on Principles Governing the

Activities of States in the Exploration and Use of Outer Space, including the

Moon and Other Celestial Bodies , is a treaty that forms the basis of international

space law. The treaty was opened for signature in the United States, the United

Kingdom and the Soviet Union on January 27, 1967, and entered into force on

October 10, 1967.

According to the Outer Space Treaty, “the exploration and use of outer space,

including the Moon and other celestial bodies, shall be carried out for the benefit and

in the interests of all countries, irrespective of their degree of economic or scientific

development, and shall be the province of all mankind.” (Part one, A, Art.I). In

addition, “The Moon and its natural resources are the common heritage of mankind”

(Part one, section E, Art.11)

How would we deal with claims of property rights on different objects in space,

such as asteroids, once private companies will go out there and exploit them, and

how should the resources be distributed after extraction?

The geopolitical factors and implications entailed are and will be numerous. Will

nations take advantage of this wave of private space companies and fight for

geopolitical and astro-political superiority? We could soon have the first nation that

would claim the Moon and its resources, even though international treaties forbid it.

China has already announced a mission in the next decade and intentions to build a

settlement.

Space exploration requires a certain level of maturity of the species that

engages in such activities, and indeed the international community has gathered

scientific knowledge and experience as nations worked together to build the

International Space Station, to develop communication systems and various joint

space projects with multiple applications.

However, once the race for resources, the modern age Gold Rush, will begin,

other geopolitical factors could be activated and a new wave of resource nationalism

would arise. A nation could claim the Moon or other celestial bodies and the

resources contained, by putting a flag on them, in the same manner Russia planted

a flag on the Arctic seabed in August 2007, in a symbolic move to enhance the

government’s disputed claim to nearly half of the floor of the Arctic Ocean and

potential oil and resources there.

23

“Currently, the biggest hurdle in actually mining these asteroids is that the law

hasn’t been settled yet,” says space lawyer Michael Listner.

If Planetary Resources is to succeed, the international community will have to

decide if the venture is legal. Currently, asteroid mining companies are placed in a

grey legal area. In the end, regardless of who claims which object or resources, a

regulatory framework will have to be outlines soon. Companies that will be able to

mine asteroid or the Moon could extract valuable resources “for the benefit and in

the interest of all countries”, but they will still have to obtain profit and invest further

in order to increase efficiency and reduce costs.

Until now, this debate was somewhere in the realm of political philosophy, but it

is to become a pressing issue that will need to be solved. This could represent one

of the most intense legislative, political and intellectual challenges that we have

faced so far. The outcome of this legislative debate could have an extremely

important impact, being able to mark the dawn of a golden age of prosperity for all

Humankind.

With a change in the context of business and the economic dynamics due to

fast-growing technologies, space will become more accessible to private companies

than to large governments with budgetary constraints and socio-political pressures.

We could see a transition from what Dolman called Astropolitiks to an era of Astro-

economics and Space Corporatism.

4. Anthropological perspectives "There are so many benefits to be derived from space exploration and exploitation;

why not take what seems to me the only chance of escaping what is otherwise the

sure destruction of all that humanity has struggled to achieve for 50,000 years?"

Isaac Asimov, speech at Rutgers University

The entire history of Homo Sapiens is a story of technological evolution. 40 000

years ago, Homo Sapiens Sapiens remains the only humanoid species left surviving

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on Earth. 10 000 years ago, in Neolithic, the modern era of technology begins with

the Agrarian Revolution. In time, humans have created increasingly complex tools

built on previous tools, through a long chain of technological and economic paradigm

shifts.

Today, the modern world is rapidly transforming as it goes through the transition

from the “industrial epoch” to the “information society” or “post-industrial epoch”

(Fukuyama, 1999). Humankind is facing the third major revolution in ten millennia,

after the Agrarian Revolution in Neolithic and the Industrial Revolution at the end of

the 18th, beginning of the 19th century. These “waves” have restructured the societies

of those times and their institutions and there is no reason to believe that this “third

wave” would spare a world that is more integrated and interconnected than ever of

profound changes.

With exponential growing technologies we could experience paradigm shifts at

an increasing rate, going through not only one revolution, but a series of

technological and industrial revolutions, constantly reshaping our economies and

societies.

The Kardashev scale is a method of measuring a civilization's level of

technological advancement, based on the amount of usable energy a civilization has

at its disposal. The scale has three designated categories called Type I, II, and III. In

1964, Kardashev defined the three levels of civilizations based on the order of

magnitude of the amount of power available to them. Metrics other than pure power

usage have also been proposed, such as 'mastery' of a planet, system or galaxy

rather than considering energy alone, or considering the amount of information

controlled by a civilization rather than the amount of energy.

Robert Zubrin uses the terms to refer to how widespread a civilization is in

space, rather than to its energy use. In other words, a Type I civilization has spread

across its planet, a Type II has extensive colonies in its respective stellar system,

and a Type III has colonized its galaxy. (Zubrin, 2000)

Exponentially growing technologies could speed up the achievement of the level

of a Type I civilization and rapidly making the transition to a Type II civilization. If

some of the ambitious private space projects that have been announced recently

succeed, it will be during the next decades that Humankind will become a multi-world

species, with Moon and Mars as the next probable locations.

25

For the first time in Human history people are making plans to leave the planet.

In my opinion, two major upcoming events will represent milestones in Human

history and economic history: the first temporary or permanent colony/settlement on

a celestial body (there are already astronauts living for short time intervals on the

ISS) and the first artefact that will be produced using raw materials from outer space

(by asteroid mining) in an off-planet facility. In the light of all the arguments brought

throughout this paper, we could say these events are likely to happen within two

decades28.

Conclusions

These events and initiatives presented could represent the beginning of what

will become a new type of economic system, with an off-planet economic layer

added to the global economy and implicitly, a new way of thinking about resources

and scarcity. The social science that we presently broadly call “economics” could see

new frontiers and new intellectual challenges, being forced to develop into a

theoretical and applicable framework that integrates the “Earthly affairs” with the

space-related business activities. Once private companies will open space and go

beyond the levels that have been achieved only by national space agencies,

Humankind will most probably enter a new Era of existence.

The reasons for creating an off-planet economy are multiple: near-infinite

resources, a flourishing economic and financial system here on Earth, reducing

inequalities around the world by creating a world of abundance and countless

opportunities by efficiently using exponentially growing technologies, a dynamic

space industry that could help create human colonies and settlements, accumulation

of scientific knowledge, a boost in technological innovation, new solutions for

Humanity’s grand challenges, increased chances of survival in the long-run. Mining

28 “Building a lunar base with 3D printing” on ESA website - http://www.esa.int/Our_Activities/Technology/Building_a_lunar_base_with_3D_printing

26

the Moon and the near-Earth asteroids could open an off-planet industry that would

inject trillions of dollars into the global GDP.

Ten millennia after the Agrarian Revolution in Neolithic, Homo Faber, Homo

Oeconomicus and Homo Technologicus are preparing to explore and exploit space

and to live on other worlds.

“A planet is the cradle of mind, but one cannot live in a cradle forever” –

Konstantin E.Tsiolkovsky

27

Bibliography

Acemoglu, D., Robinson, J., (2012) Why Nations Fail: The Origins of Power,

Prosperity and Poverty, Crown Publishing Group.

Diamandis, H.P., Kotler, S., (2012) Abundance: The Future is Better Than You

Think, Free Press.

Dolman, E., (2001) Astropolitik: Classical Geopolitics in the Space Age, Frank Class

Publishers.

Fukuyama, F., (1999) The Great Disruption: Human Nature and the Reconstitution of

Social Order. Free Press.

Georgescu-Roegen, N., (1971) The Entropy Law and The Economic Process,

Harvard University Press.

Krugman, P., (2009) How Did Economists Get It So Wrong, The New York Times,

September 2, 2009

Kurzweil, R., (2001) The Law of Accelerating Returns, Published on KurzweilAI.net,

March 7, 2001.

North, D., (1994) Economic Performance Through Time, American Economic

Review, 1994, 84(3)

OECD (2011) “The Space Sector in 2011 and beyond”, in The Space Economy at a

Glance 2011, OECD Publishing

Schweller, R.L., (2009) Ennui becomes us, The National Interest, December 16.

United Nations Treaties and Principles on Outer Space, 2002, United Nations, New

York.

Zubrin, R.M., (2000) Entering Space: Creating a Spacefaring Civilization, Jeremy

P.Tarcher (Penguin Group).

28

Other online references and resources

Adam Mann, “The Year's Most Audacious Private Space Exploration Plans”, Adam

Mann, Wired Science (27.12.2012)

http://www.wired.com/wiredscience/2012/12/audacious-space-companies-2012/

Deep Space Industries Official Website - http://deepspaceindustries.com/

Inspiration Mars Official website – http://www.inspirationmars.org/

Jeff Foust, “Space economies and economics”, 2007 -

http://www.thespacereview.com/article/962/1

MarsOne Official website - http://mars-one.com/en/

New Space Journal - http://www.newspacejournal.com/

Peter Diamandis Official Website - http://www.diamandis.com/

Ray Kurzweil profile page on Ted website -

http://www.ted.com/speakers/ray_kurzweil.html

Space and NASA news - http://www.space.com/

Videography

Peter Diamandis on our next giant leap (2008) – Ted Video –

http://www.ted.com/talks/peter_diamandis_on_our_next_giant_leap.html

Peter Diamandis – Abundance is our future (2012) – Ted Video –

http://www.ted.com/talks/peter_diamandis_abundance_is_our_future.html

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Ray Kurzweil – The Accelerating Power of Technology (2006)– Ted Video

http://www.ted.com/talks/ray_kurzweil_on_how_technology_will_transform_us.html

Ray Kurzweil – A University for the coming Singularity (2009) – Ted Video

http://www.ted.com/talks/ray_kurzweil_announces_singularity_university.html